Washington, DC, December 21, 2006--The current cooling trend in the housing market appears to have dampened investor confidence somewhat in companies whose primary business involves apartments and condos, according to the results of the latest Multifamily Stock Index (MFSI), released today by the National Association of Home Builders (NAHB).
The November MFSI dropped by 16 points--about half of one percent--to an index value of 3632, down from last month’s record high of 3648. It was the first decrease in the MFSI’s value since May 2006; but even with this drop, the MFSI remains 38 percent higher than it was a year ago.
“The current inventory of unsold condos is somewhat troubling for the multifamily housing market,” said David Seiders, NAHB’s chief economist. “We’re keeping a close eye on how this will impact the market.”
The MFSI tracks the stocks of 24 publicly traded firms, including 20 Real Estate Investment Trusts (REITs), principally involved in owning, developing and managing multifamily housing.
For comparison, the NAHB benchmarks its multifamily stock index against the S&P 500 with dividends reinvested. In November, the value of the S&P 500 with dividends reinvested jumped from 1267 to 1291, which is 15 percent higher than it was a year ago.
“With attractive sales incentives being offered on condos and affordability on the rise, we expect that buyers will be coming back into the market before long,” said Seiders. “We also think that positive market fundamentals--job and income growth as well as strong household formations--will continue to support the rental market.”
